1. The multiplier effect is an economic term, referring to the proportional amount of increase or decrease in final income. It measures the impact that a change in an economic activity like investment or spending will have on the total economic output of something. So, by using one of Malaysia’s productive industries as an example, briefly explain what will happen if the government buys a product or service from a company in the economy.

2. The sticky wage theory is where employee pay tends to respond slowly to changes in company performance or to the economy. Suppose Company A has agreed in advance to pay employees an hourly wage of RM15 based on the expectation that the price level will be RM80. If the price level is actually RM75, Company A firm receives 5% less for its output than it expected and its labor costs are fixed at RM15 per hour. Based on the above situation and using an appropriate example, explain the impact on Company A production activity.

3. Assuming an unanticipated monetary policy action. Are there different effects in the new classical theory when compared to the original classical theory? Are there differences between the new classical and Keynesian theories?

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AOne of the productive Industry of malaysia is electricao and the electronics products if the government spends in this industry through buying the co... View the full answer